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Since 2012 is the first presidential election year after the U.S. Supreme Court’s Citizens United ruling, which opened the floodgates on corporate political spending, it’s not surprising that oversight and disclosure of these practices have become hot topics at shareholder meetings this spring.
It also isn’t surprising that health insurance giant WellPoint Inc. has taken a position against giving shareholders meaningful oversight of its political spending and wants to continue to throw its considerable financial weight around the political arena without complete transparency. WellPoint has long had a reputation for political hardball, so its opposition is consistent with its personality.
A resolution that would have required WellPoint to fully disclose its political spending failed at its recent shareholders’ meeting, largely because management urged investors to oppose it. Those of us concerned about the intersection of corporate money and elections must keep pressure on WellPoint to come clean about the political spending.
While full transparency of political spending is important to preserving the integrity of the electoral process, it is also important in terms of corporate governance. Since publicly traded companies are at least ostensibly owned by their stockholders, companies must remember that owners have a right to know how their money is being spent. Transparency and full disclosure can help deter high-risk political spending that may hurt shareholder value. Full disclosure isn’t just the right thing to do, it’s also good business.
The Center for Public Accountability rates WellPoint’s political spending disclosure practices as “having room for improvement.” According to the center’s analysis, WellPoint’s practices “leave significant room for serious misrepresentation of the company’s political spending through trade associations.”
As an example, the analysis points to the $86 million funneled from the trade association American Health Insurance Plans to the U.S. Chamber of Commerce to lobby against federal health reform in 2009. While we know some of that money came from WellPoint, its weak disclosure practices make it impossible to know how much they contributed.
WellPoint has also provided funding for the infamous American Legislative Exchange Council, which is notorious for bankrolling numerous conservative causes across the country. And WellPoint continues to invite controversy by electing board members like Susan Bayh, who have egregious conflicts of interest when it comes to the company’s political activity.
WellPoint’s arrogance and tin ear for responsible governance, both internally and at large, was on full display at its annual meeting May 16. I’ve held on to the 24 shares I got as part of the Anthem demutualization simply because it gives me a vote, albeit a small one, in how WellPoint is run and a ticket into the annual meeting.
I’m not sure who’s in charge of organizing the meeting, but their disdain for any outside input was palpable. This year, stockholders were required to go through metal detectors, and purses and briefcases were hand searched. It’s not clear what WellPoint was expecting to happen, but if you have to do a weapons search before your stockholders’ meeting, it’s time to re-examine your business model.
Rather than face the companies’ owners, the board entered the room with no introduction and sat with their backs to the audience. I’ve always found that telling—they don’t even pretend to care what those of us in the back of the room think.
And while CEO Angela Braly characterized accusations that WellPoint largely underwrote the Chamber of Commerce’s campaign against federal health reform in 2009 as “unfair,” she refused to fess up as to how much WellPoint money was actually spent on the effort.
And while I recognize that Braly is a busy woman, maybe next year she can allocate more than 30 minutes for the question-and-answer session that follows the shareholders’ meeting. Since the company insists on continuing its secret political spending and allows obvious conflicts of interest internally, she should expect the pointed questions to persist. Secrecy makes people suspicious and WellPoint has an awful lot of explaining to do.•
• Vaughn is policy director for Common Cause/Indiana, a nonpartisan citizens lobbying organization that works for open, honest and accountable government. Send comments on this column to ibjedit@ibj.com.
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